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U.S. Soda Sales Fell at Slower Rate Last Year

A drop in U.S. soft-drink sales slowed last year as consumers migrated from pricier juices and teas back to less-expensive soda in the down economy.

Soft-drink volume fell 2.1% in 2009, compared with a 3% decline in 2008 and a 2.3% drop in 2007, according to Beverage Digest, an industry publication and data service that tracks soft-drink sales in supermarkets and other retail outlets, vending machines and restaurants.

Soda sales in the U.S. have declined for five years in row. Above, the soft-drink aisle at a Wal-Mart store in Kearny, N.J.
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Soda sales have fallen for five years in a row, and the cumulative decline has erased gains made by the industry between 1996 and 2004, the peak year for U.S. sales.

The moderation of decline was a spot of good news for the industry. But John Sicher, editor and publisher of Beverage Digest, said he expects soft-drink volume to continue to decline by about 1.5% to 3% annually over the next five to 10 years.

Mr. Sicher said he expects some consumers to move back to more expensive bottled beverages as the economy improves. Others are likely to shy away from soft drinks because of worries about sugar and other nutrition issues. "The carbonated category faces continued headwinds from the health, wellness and obesity concerns, and also the potential negative impact of soda taxes," he said, such as those under consideration in New York City.

Volume slid to about 9.4 billion cases last year from 10.24 billion cases in 2004.

Coca-Cola remained the No. 1 soft drink in 2009, but its market share fell 0.3 percentage point to 17%.

After years as the third most-popular soda, Diet Coke reached a near tie with Pepsi-Cola for the No. 2 spot, with 936.3 million and 936.4 million cases respectively. Diet Coke and Pepsi-Cola both scored a 9.9% market share last year.

Coca-Cola Co. Chairman and Chief Executive Muhtar Kent has said that restoring soft-drink growth in the U.S. is a key priority of the company's "2020 Vision" growth plan. Eric Foss, chief executive of PepsiCo's North American beverage operations, told investors earlier this week that he expects the company's broad beverage portfolio to grow, but the soft-drink segment to continue to decline.

Overall, the U.S. market for nonalcoholic beverages—including soda, bottled water, sports drinks, fruit drinks, energy drinks and other drinks—fell 3.1% last year, according to Beverage Marketing Corp., an industry consulting firm that also released data Wednesday. It was the second year of decline in a row, and more drastic than the 2.1% drop in 2008.

Michael Bellas, Beverage Marketing's chairman and CEO, said "the worst may be over" for the beverage industry after a dismal 2009 marked by high unemployment and broad consumer malaise. But Mr. Bellas added that he sees a bright spot in recent months as declines in sales of energy drinks and sports drinks have leveled out.

"This is a recovery led by the younger consumer that still has a job," he said, rather than baby boomers who have lost savings and fundamentally changed their buying habits.

Bottled-water sales declined for the second year in a row, after a decade of growth. Nestlé Pure Life, a line of water traditionally sold in mass retailers such as
Wal-Mart Stores Inc.,
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logged a 14.6% increase in volume, an indication of popularity of comparatively inexpensive multipack water.